The initial claims level increased to 339,000 for the
week ending February 8…The claims data have shown some choppiness, likely the result
of volatility from the extreme winter weather conditions. In general, claims
have not deviated from its 330,000 - 340,000 trend. These levels normally
support payroll growth in the neighborhood of 185,000 - 200,000 jobs per
months. “ Charts and details at...
RETAIL SALES DISSAPPOINT (dShort.com)
“The Advance Retail Sales Report released this morning
shows that sales in January came in at -0.4% month-over-month, down from -0.1%
in December, which was a downward revision from 0.2%. Today’s headline number
came in well below the Investing.com forecast of a 0.3% gain…The Advance retail
sales, both headline and core, came in worse than expected, and the
year-over-year trends for both have been weakening since mid-2011.” Detailed
analysis and commentary from Advisor Perspectives, dShort.com, at…http://advisorperspectives.com/dshort/updates/Retail-Sales-in-Review.php
JOLTS REPORT VERIFIES ECONOMIC SOFT PATCH (CNBC)
“[FED Chairman Janet] Yellen more or less dismissed the December and January reports as not indicative of underlying strength in the economy [as did many economists]. The reports showed job creation of 75,000 and 113,000, respectively—well below economist expectations and flying in the face of belief that the economy is poised to show a significant rebound in 2014. In fact, the JOLTS [Job Openings and Labor Turnover Survey] data showed even weaker job creation than the BLS report—just 67,000 new positions in December. "There certainly is a lot of noise out there regarding jobs data, but ... this latest release confirms the negative sentiment induced by the (BLS) establishment survey" released Friday, Nick Colas, chief market strategist at ConvergEx, said in a report analyzing the JOLTS data. "It is the first uniformly negative report seen in over a year." Story and video at CNBC at…
CORRECTION OVER
Sentiment was up yesterday after falling for 15-straight trading sessions. That just means that more traders are betting long. It appears that I am not the only one who suspects the correction might be over, at least for a while. Sentiment is still very high at 66%-bulls, but based on statistics, 66%-bulls is not now a sell in my NTSM system. There has also been late day buying that suggests the pros are optimistic.
S&P 500 is now 1% above the 50-day Moving average and
that was a frequent correction over point during 2013. All of the short term internals indicators
are positive (see Market Internals below) and continue to suggest that the
S&P 500 should get back to the prior high of 1848.
Before we get out the Champaign, the correction will be
back in play if the index can’t get above the old highs around 1848.
5-10-20 TIMER (S&P 500) SAYS CORRECTION OVER TOO
The 5-day exponential moving average (5-dEMA) of the
S&P 500 Index and the 10-dEMA are now above the 20-dEMA so the S&P 500
5-10-20 Timer system has called a buy today.
For my use in the NTSM system, I put some extra buffer into this timing
system to eliminate whipsaw signals (i.e. a buy one day and a sell soon after). So for me, I’d like to see the 5-day EMA 1.3%
above the 20-dEMA and the 10-dEMA 0.3% above the 20-dEMA before I call a
long-term Buy.
MARKET REPORT Wednesday, the S&P 500 was up 0.6% to 1829 (rounded). Volume was about 15 below normal and that was
probably caused by the snow storm in NY city.
VIX was down about 1% to 14.14. At the recent high of
1848 VIX was 12.3 or about 15% higher than it is now. More importantly, the VIX continues to fall suggesting the S&P 500 can rise.
The 10-year Treasury Note yield fell to 2.73%. Today,
investors were buying bonds.
MARKET INTERNALS (NYSE DATA)
The 10-day moving average of stocks advancing fell
slightly to 58% at the close. (A number above
50% for the 10-day average is generally good news for the market.) New-highs outpaced new-lows improved Thursday,
leaving the spread (new-hi minus new-low) at +121. (It was +89 Wednesday). The 10-day moving
average of change in the spread was +9. In other words, over the last 10-days,
on average, the spread has increased by 9 each day. Up volume has broken out
and is sharply up.
Market Internals are a decent trend-following analysis of
current market action, but should not be used alone for short term trading.
They are usually right, but they are often late. They are most useful when they diverge from
the Index. In 2013, using these
internals alone would have made a 16% return vs. 30% for the S&P 500 (in on
Positive out on Negative – no shorting).
Of course, few trend-following systems will do well in an extreme low-volatility,
straight-up year.
NTSM
The NTSM system remained HOLD today, Wednesday. The first Sell signal of this cycle was just
over 2-weeks ago on 24 January. Sentiment, Price, Volume and VIX indicators are
all neutral.
MY INVESTED POSITION
I am about 40% invested in stocks because I upped my
stock holdings by 10% on 12 February (S&P 500-1819). This is a conservative allocation, but
putting a bit more into stocks recognizes that the market internals are
improving on the S&P 500 and the “correction” may once again confound the
bears. Can you say March? I’ll reassess
at the end of the month and add more or pull some out depending on indicators.
